Appian Announces Fourth Quarter and Full Year 2023 Financial Results

Fourth quarter cloud subscription revenue increased 26% year-over-year to $83.1 million
Full year cloud subscription revenue increased 29% year-over year to $304.5 million

MCLEAN, Va., Feb. 15, 2024 (GLOBE NEWSWIRE) -- Appian (Nasdaq: APPN) today announced financial results for the fourth quarter and full year ended December 31, 2023.

“Appian delivered our plan in 2023 and reached two milestones. Full year revenue exceeded half a billion dollars, and we achieved the highest quarterly gross margin in our public history,” said Matt Calkins, CEO & Founder.

Fourth Quarter 2023 Financial Highlights:

• Revenue: Cloud subscription revenue was $83.1 million, up 26% compared to the fourth quarter of 2022. Total subscriptions revenue, which includes sales of our cloud subscriptions, on-premises term license subscriptions, and maintenance and support, increased 24% year-over-year to $115.8 million. Professional services revenue was $29.5 million, a decrease of 9% compared to the fourth quarter of 2022. Total revenue was $145.3 million, up 16% compared to the fourth quarter of 2022. Cloud subscription revenue retention rate was 119% as of December 31, 2023.
• Operating loss and non-GAAP operating loss: GAAP operating loss was $(16.8) million, compared to $(40.6) million for the fourth quarter of 2022. Non-GAAP operating loss was $(1.4) million, compared to $(26.8) million for the fourth quarter of 2022.
• Net loss and non-GAAP net loss: GAAP net loss was $(10.0) million, compared to $(34.4) million for the fourth quarter of 2022. GAAP net loss per share was $(0.14) for the fourth quarter of 2023, compared to $(0.47) for the fourth quarter of 2022. Non-GAAP net income was $4.9 million, compared to non-GAAP net loss of $(20.6) million for the fourth quarter of 2022. Non-GAAP net income per diluted share was $0.06, compared to the $(0.28) net loss per share for the fourth quarter of 2022. GAAP net loss and non-GAAP net income for the fourth quarter of 2023 included $11.1 million, or $0.15 per share, of foreign currency exchange gains. GAAP and non-GAAP net loss for the fourth quarter of 2022 included $8.5 million, or $0.12 per share, of foreign currency exchange gains. We do not forecast foreign exchange rate movements.
• Adjusted EBITDA: Adjusted EBITDA was $1.0 million, compared to adjusted EBITDA loss of $(24.8) million for the fourth quarter of 2022.
• Cash flows: Net cash used in operating activities was $(8.2) million for the three months ended December 31, 2023 compared to $(12.6) million of net cash used in operating activities for the same period in 2022.
  

Full Year 2023 Financial Highlights:

• Revenue: Cloud subscription revenue was $304.5 million for the full year 2023, up 29% compared to the full year 2022. Total subscriptions revenue increased 21% year-over-year to $412.3 million for the full year 2023. Professional services revenue was $133.0 million for the full year 2023, compared to $127.8 million for the full year 2022. Total revenue was $545.4 million for the full year 2023, up 17% compared to the full year 2022.
• Operating loss and non-GAAP operating loss: GAAP operating loss was $(108.0) million for the full year 2023, compared to $(145.0) million for the full year 2022. Non-GAAP operating loss was $(54.3) million for the full year 2023, compared to $(83.3) million for the full year 2022.
• Net loss and non-GAAP net loss: GAAP net loss was $(111.4) million for the full year 2023, compared to $(150.9) million for the full year 2022. GAAP net loss per share was $(1.52) for the full year 2023, compared to $(2.08) for the full year 2022. Non-GAAP net loss was $(59.2) million for the full year 2023, compared to $(89.2) million for the full year 2022. Non-GAAP net loss per share was $(0.81) for the full year 2023, compared to the $(1.23) net loss per share for the full year 2022. GAAP and non-GAAP net loss for the full year 2023 included $8.7 million, or $0.12 per share, of foreign currency exchange gains. GAAP and non-GAAP net loss for the full year 2022 included $6.1 million, or $(0.08) per share, of foreign currency exchange losses.
• Adjusted EBITDA: Adjusted EBITDA loss was $(44.8) million for the full year 2023, compared to adjusted EBITDA loss of $(76.0) million for the full year 2022.
• Balance sheet and cash flows: As of December 31, 2023, Appian had total cash, cash equivalents, and investments of $159.0 million. Net cash used in operating activities was $(110.4) million for the full year 2023, compared to $(106.6) million of net cash used in operating activities for the full year 2022.
  

A reconciliation of GAAP to non-GAAP financial measures has been provided in the tables following the financial statements in this press release. An explanation of these measures is also included below under the heading “Non-GAAP Financial Measures.”

Recent Business Highlights:

• US Army Revolutionizes Contract Writing with Appian Platform
• Appian Government Cloud Achieves “In Process” Designation for FedRAMP High Impact Level
• Appian Delivers Better Business Decisions and Outcomes with AI Plus Data Fabric Analytics
• Appian Named a Leader in Everest Group’s Low-code Technology Providers in Insurance PEAK Matrix Assessment 2023
• Appian Named a 2023 Tech100 Honoree by the Northern Virginia Technology Council
• 2023 Appian International Partner Award Winners Demonstrate Process Automation Excellence in Europe
• Appian Enhances “One Appian” Global Partner Program Strategy for 2024
  

Financial Outlook:

As of February 15, 2024, guidance for 2024 is as follows:

• First Quarter 2024 Guidance:
  
  
  • Cloud subscription revenue is expected to be between $84.0 million and $86.0 million, representing year-over-year growth of 21% to 23%.
    
  • Total revenue is expected to be between $148.0 million and $150.0 million, representing a year-over-year increase of 9% to 11%.
  • Adjusted EBITDA loss is expected to be between $(9.0) million and $(5.0) million.
  • Non-GAAP net loss per share is expected to be between $(0.21) and $(0.16), assuming weighted average common shares outstanding of 73.5 million.

• Full Year 2024 Guidance:
  
  
  • Cloud subscription revenue is expected to be between $364.0 million and $366.0 million, representing year-over-year growth of 20%.
    
  • Total revenue is expected to be between $615.0 million and $617.0 million, representing a year-over-year increase of 13%.
  • Adjusted EBITDA loss is expected to be between $(25.0) million and $(20.0) million.
  • Non-GAAP net loss per share is expected to be between $(0.73) and $(0.66), assuming weighted average common shares outstanding of 73.8 million.

Conference Call Details:

Appian will host a conference call today, February 15, 2024, at 8:30 a.m. ET to discuss Appian's financial results for the fourth quarter ended December 31, 2023 and business outlook.

To access the call, navigate to the following link⁽¹⁾. Once registered, participants can dial in using their phone with a dial in and PIN, or they can choose the Call Me option for instant dial to their phone. The live webcast of the conference call can also be accessed on the Investor Relations page of our website at http://investors.appian.com.

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Investor Day:

We announced an Investor Day on Tuesday, April 16 near Washington DC starting at 1:30 p.m. ET.

Event Details:
What: Appian Investor Day 2024
When: April 16, 2024 at 1:30 P.M. to 5:00 P.M. Eastern Time
In-person attendance: Please contact our team at investors@appian.com for more information.
Webcast: https://investors.appian.com/events-and-presentations/events (live and replay)
Replay: A replay of the event will be archived on the investor relations website

About Appian

Appian is a software company that automates business processes. The Appian AI Process Platform includes everything you need to design, automate, and optimize even the most complex processes, from start to finish. The world's most innovative organizations trust Appian to improve their workflows, unify data, and optimize operations—resulting in better growth and superior customer experiences. For more information, visit www.appian.com.

Non-GAAP Financial Measures

To supplement its consolidated financial statements, which are prepared and presented in accordance with GAAP, Appian provides investors with certain non-GAAP financial performance measures. Appian uses these non-GAAP financial performance measures for financial and operational decision-making and as a means to evaluate period-to-period comparisons. Appian’s management believes these non-GAAP financial measures provide meaningful supplemental information regarding Appian’s performance by excluding certain expenses that may not be indicative of our recurring core business operating results. Appian believes both management and investors benefit from referring to these non-GAAP financial measures in assessing Appian’s performance and when planning, forecasting, and analyzing future periods. These non-GAAP financial measures also facilitate management’s internal comparisons to historical performance as well as comparisons to competitors’ operating results. Appian believes these non-GAAP financial measures are useful to investors both because (1) they allow for greater transparency with respect to measures used by management in its financial and operational decision-making and (2) they are used by Appian’s institutional investors and the analyst community to help them analyze the health of Appian’s business.

The non-GAAP financial performance measures include the following: non-GAAP subscriptions cost of revenue, non-GAAP professional services costs of revenue, non-GAAP total cost of revenue, non-GAAP total operating expense, non-GAAP operating loss, non-GAAP income tax expense, non-GAAP net loss, and non-GAAP net loss per share, basic and diluted. These non-GAAP financial performance measures exclude the effect of stock-based compensation expense, certain non-ordinary litigation-related expenses consisting of legal and other professional fees associated with the Pegasystems cases (net of insurance reimbursements), or Litigation Expense, amortization of the judgment preservation insurance policy, or JPI Amortization, and severance costs related to an involuntary reduction in our workforce in 2023, or Severance Costs. While some of these items may be recurring in nature and should not be disregarded in the evaluation of our earnings performance, it is useful to exclude such items when analyzing current results and trends compared to other periods as these items can vary significantly from period to period depending on specific underlying transactions or events that may occur. Therefore, while we may incur or recognize these types of expenses in the future, we believe removing these items for purposes of calculating our non-GAAP financial measures provides investors with a more focused presentation of our ongoing operating performance.

Appian also discusses adjusted EBITDA, a non-GAAP financial performance measure it believes offers a useful view of the overall operation of its businesses. The company defines adjusted EBITDA as net loss before (1) other non-operating (income) expenses, net, (2) interest expense, (3) income tax expense, (4) depreciation expense and amortization of intangible assets, (5) stock-based compensation expense, (6) Litigation Expense, (7) JPI Amortization, and (8) Severance Costs. The most directly comparable GAAP financial measure to adjusted EBITDA is net loss. Users should consider the limitations of using adjusted EBITDA, including the fact this measure does not provide a complete measure of our operating performance. Adjusted EBITDA is not intended to purport to be an alternative to net loss as a measure of operating performance or to cash flows from operating activities as a measure of liquidity.

The presentation of these non-GAAP financial measures is not intended to be considered in isolation from, as a substitute for, or superior to the financial information prepared and presented in accordance with GAAP, and Appian’s non-GAAP measures may be different from non-GAAP measures used by other companies. For more information on these non-GAAP financial measures, see the reconciliation of these non-GAAP financial measures to their nearest comparable GAAP measures at the end of this press release. Appian provides guidance ranges for non-GAAP net loss per share and adjusted EBITDA; however, we are not able to reconcile these amounts to their comparable GAAP financial measures without unreasonable efforts because certain information necessary to calculate such measures on a GAAP basis is unavailable, subject to high variability, dependent on future events outside of our control, and cannot be predicted. In addition, Appian believes such reconciliations could imply a degree of precision that might be confusing or misleading to investors. The actual effect of the reconciling items that Appian may exclude from these non-GAAP expense numbers, when determined, may be significant to the calculation of the comparable GAAP measures.

Forward-Looking Statements

This press release includes forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. All statements contained in this press release other than statements of historical facts, including statements regarding Appian’s future financial and business performance for the first quarter and full year 2024, future investment by Appian in its go-to-market initiatives, increased demand for the Appian AI-Powered Process platform, market opportunity and plans and objectives for future operations, including Appian’s ability to drive continued subscriptions revenue and total revenue growth, are forward-looking statements. The words “anticipate,” “believe,” “continue,” “estimate,” “expect,” “intend,” “may,” “will,” “plan,” and similar expressions are intended to identify forward-looking statements. Appian has based these forward-looking statements on its current expectations and projections about future events and financial trends that Appian believes may affect its financial condition, results of operations, business strategy, short-term and long-term business operations and objectives, and financial needs. These forward-looking statements are subject to a number of risks and uncertainties, including the risks and uncertainties associated with Appian’s ability to grow its business and manage its growth, Appian’s ability to sustain its revenue growth rate, continued market acceptance of Appian’s AI-Powered Process platform and adoption of low-code solutions to drive digital transformation, the fluctuation of Appian’s operating results due to the length and variability of its sales cycle, competition in the markets in which Appian operates, AI being a disruptive set of technologies that may affect the markets for Appian’s software dramatically and in unpredictable ways, risks and uncertainties associated with the composition and concentration of Appian’s customer base and their demand for its platform and satisfaction with the services provided by Appian, Appian’s ability to operate in compliance with applicable laws and regulations, Appian’s strategic relationships with third parties, and additional risks and uncertainties set forth in the “Risk Factors” section of Appian’s most recent annual report on Form 10-K, quarterly reports on Form 10-Q, and other filings with the Securities and Exchange Commission. Moreover, Appian operates in a very competitive and rapidly changing environment. New risks emerge from time to time. It is not possible for Appian’s management to predict all risks, nor can Appian assess the impact of all factors on its business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements Appian may make. In light of these risks, uncertainties, and assumptions, Appian cannot guarantee future results, levels of activity, performance, achievements, or events and circumstances reflected in the forward-looking statements will occur. Appian is under no duty to update any of these forward-looking statements after the date of this press release to conform these statements to actual results or revised expectations, except as required by law.

Investor Contact
Srinivas Anantha, CFA
703-442-8844
investors@appian.com

Media Contact
Ben Farrell
703-442-1067
ben.farrell@appian.com

^(a) Per share amounts do not foot due to rounding.
^(b) Accounts for the impact of 2.0 million shares of dilutive securities resulting in total diluted shares of 75.3 million.